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Investor
Presentation
July 10, 2017
nuvopharmaceuticals.com
TSX: NRI
Nuvo Pharmaceuticals™ Inc.
Click Harbour
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Certain information to be discussed during this corporate update contains forward-looking statements
within the meaning of applicable securities laws including, among others, statements concerning the
Company’s 2017 objectives, the Company’s strategies to achieve those objectives, as well as
statements with respect to Management’s beliefs, plans, estimates, and intentions, and similar
statements concerning anticipated future events, results, circumstances, performance or expectations
that are not historical facts.
Such forward-looking statements reflect Management’s current beliefs as of the date hereof and are
based on information currently available to Management.
These statements are not guarantees of future performance and are based on the Company’s
estimates and assumptions and are subject to risks and uncertainties, including those described in the
Company’s Management Discussion and Analysis regarding the 2016 annual audited financial
statements and news releases, which could cause the Company’s actual results to differ materially
from the forward-looking statements to be discussed during this presentation.
Although the forward-looking information discussed during this presentation is based upon what
Management believes are reasonable assumptions, there can be no assurance that actual results will
be consistent with these forward-looking statements.
Except as required by applicable law, the Company undertakes no obligation to publicly update or
revise any forward-looking statement, whether as a result of new information, future events or
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otherwise.
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Non-IFRS
Measures
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EBITDA is a non-IFRS financial measure. The term EBITDA does not have any
standardized meaning under IFRS and therefore may not be comparable to similar
measures presented by other companies. The Company defines Adjusted EBITDA as net
income from continuing operations before net interest income, plus taxes, depreciation,
amortization and stock based compensation. Management believes Adjusted EBITDA is a
useful supplemental measure from which to determine the Company’s ability to generate
cash available for working capital, capital expenditures and income taxes.
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Nuvo
Pharmaceuticals
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Nuvo Pharmaceuticals
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Highlights
• Commercial stage healthcare company
•
3 commercial products: Pennsaid 2%, Pennsaid, HLT Patch
•
Cash flow positive and profitable
•
2016 revenue grew 32% over 2015
• Strong barriers to entry: long-life IP and long-term contracts
• FDA licensed manufacturing facility located in Québec
• Future revenue growth
•
Pennsaid 2% out-licensing in international markets
•
M&A plan to acquire accretive products and businesses
• Strong balance sheet with $18.6 million of cash and short-term investments
and no debt (March 31, 2017)
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Our Lead Product: Pennsaid 2%
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FDA Approved and Selling in the U.S.
Topical and Transdermal Drug Delivery
Market
Indication
Benefits
U.S. Commercial
Status
•
•
27M U.S. patients with osteoarthritis
Targeting U.S. NSAID market
•
Treating the pain of osteoarthritis of the knee
•
•
•
Low systemic exposure to minimize side effects
Only twice per day dosed topical NSAID in U.S.
Metered dose dispenser
•
U.S. rights sold to Horizon Pharma in October 2014 for
US$45 million
Nuvo is Horizon’s exclusive long-term manufacturer to
2029
•
•
Follow-on product to Pennsaid,
contains 2% diclofenac sodium
Intellectual
Property
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•
•
Multiple patents listed in the FDA Orange Book
continuing to 2030
4 generics have settled with Horizon for a 2029 entry
date
Recent court decision blocks Actavis (first generic filer)
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until at least 2027
Commercial Partners Sell Our Approved
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Products
Pennsaid / Pennsaid 2%
HLT Patch
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Pennsaid 2% U.S. Average Total Bottles
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Dispensed Weekly Per Period
Average Total
Bottles/Week
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Horizon launch January 1, 2015
Source: IMS Health
nuvopharmaceuticals.com | TSX: NRI
Pennsaid 2% U.S. Average Total Bottles
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Dispensed Weekly Per Month
Average Total
Bottles/Week
11,000
10,000
9,000
8,000
7,000
6,000
5,000
4,000
3,000
2,000
1,000
0
Horizon launch January 1, 2015
Source: IMS Health
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Pennsaid
2%Master
U.S. Growth
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Opportunity
•
Sold in U.S. by Horizon Pharma (NASDAQ:HZNP), a US$1.7 billion market cap
U.S. biopharmaceutical company utilizing its Primary Care and Rheumatology
sales force
•
Horizon’s top-selling Primary Care product
•
Pennsaid 2% is the only 2X per day topical NSAID available in the U.S.
•
Only topical NSAID competitor in the U.S. is Voltaren Gel
•
•
•
•
Requires 4X per day dosing
Went generic in 2016
No sales force promoting it
Total sales of branded and generic versions have plateaued
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Product
Sales
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to Nuvo
title
Partners/Gross
style
Margin
CDN$ Thousands
Gross Margin on Gross Margin on
Gross Margin on Product Sales
Product Sales
Product Sales
Q1 - 57%
Q2 - 57%
Q4 - 57%
8,000
7,000
6,000
5,000
4,000
3,000
Gross Margin on
Product Sales
Q1 - 58%
Gross Margin on
Gross Margin on Product Sales
Q4 - 51%
Product Sales
Q3 - 49%
Gross Margin on
Product Sales
Q3 - 50%
Gross Margin on
Product Sales
Q1 - 35%
Gross Margin on
Product Sales
Q2 - 35%
2,000
1,000
0
Pennsaid 2%
Pennsaid
HLT Bulk
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2016
Performance
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title
2015
style
(January 1 to December 31)
CDN$ Millions
30
$27.0
26
22
$20.5
18
$13.5
14
$8.8
10
$8.0
$8.9
6
2
Total Revenue
-2
Gross Margin
2015
(1) Adjusted
EBITDA is a non- GAAP measure defined on slide 3
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Adjusted EBITDA(1)
2016
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Click
Q1
2017
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Performance
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CDN$ Millions
10
8
$7.0
6
$3.9
4
$2.3
2
0
Total Revenue
Gross Margin
Adjusted EBITDA(1)
Q1 2017
(1) Adjusted
EBITDA is a non- GAAP measure defined on slide 3
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ClickSerialization
U.S.
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Legislation
title styleChanges
• On November 27, 2017, all U.S. pharmaceutical products must be
individually serialized
• Nuvo has shut down commercial bottle production to install new
equipment that can individually serialize each commercial bottle
• Nuvo expects to start manufacturing individually serialized product
with newly installed equipment in Q3 2017
• Horizon plans to draw down its non-serialized inventory in Q2 and
Q3 ahead of November 27th serialization implementation date
• Nuvo anticipates a weak Q2 and Q3 as a result
• Nuvo expects Horizon to rebuild inventory with serialized product
purchased from Nuvo
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Nuvo Pharmaceuticals Strategy to Increase
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and Diversify Revenue Streams
• Most of Nuvo’s revenue is being generated by
Pennsaid 2% in the U.S.
• Create a global Pennsaid 2% franchise by
out-licensing to strong commercial partners
throughout the world
• Acquire complementary strategic assets
through M&A to increase sales and profitability
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Pennsaid 2%
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International Out-Licensing Opportunities
Indication | Acute pain for sprains and strains
Available for out-licensing
Licensed, not yet launched
Launched 2014
Status |
E.U., Canada and Australia may require additional clinical
trial for approval
Most other jurisdictions will base approval on existing U.S.
FDA approval
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$1.5B
Global
Topicaltitle
Diclofenac
Market
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to
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style
(USD in 2015)
Middle East
North Africa,
$51,000,000
Asia (incl. Australia),
$130,000,000
South America,
$100,000,000
Europe,
$550,000,000
North America,
$635,000,000
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Click toLicensing
Target
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Agreement
title styleStructure
• Modest upfront payments on signing/regulatory approval
• Royalties based on net sales in the territory and/or
transfer pricing
• Exclusive long-term manufacturing agreement
• Licensee responsibility for obtaining and
maintaining regulatory approval utilizing
drug dossier provided by Nuvo
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Nuvo
M&A
editFocus
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GLOBAL
Drugs/Companies
OTC/Rx/select Devices
Brands or select Generics
Intellectual Property and/or
Barriers to Entry (Manufacturing
etc.)
Initial Acquisition
Criteria for Nuvo
Utilize Varennes semisolids/liquids manufacturing
capacity and expertise
Opportunity to create value
Currently generating Cash Flow
or well defined path to
commercialization
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Manufacturing
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Manufacturing
•
Facility in Varennes Québec is FDA, Health Canada and MHRA approved
•
Manufactures Pennsaid, Pennsaid 2% and HLT Patch bulk for the global market
•
26,000 square foot facility with 3 production lines, 2 compounding rooms
• Specialized expertise in semi-solids and non-sterile liquids
•
Fully integrated pharmaceutical manufacturer with in-house capabilities including:
• Quality Assurance
• Quality Control (Including a Microbiology Laboratory)
• Logistics & Purchasing
•
Experienced management team with an average of 20 years of pharmaceutical
manufacturing industry experience
•
Capacity utilization of commercial bottles is approximately 35%*
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*have ability to add a second shift when required
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Manufacturing
Manufacturing Lines ● Compounding ● Unit Dose Manufacturing
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Upcoming
Pennsaid
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2% style
Potential Milestones
Q3 – Q4 2017
International licensing transactions completed
and announced
Q3 – Q4 2017
Product acquisitions(s) completed and
announced
2018/2019
Regulatory approvals obtained and revenues
commence from international licensing and
product acquisition transactions
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Financial
Snapshot
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Stock Symbol
TSX: NRI
Market Cap
(July 10/17)
$48.5 million at
$4.20 per share
Shares Outstanding
11.6 million
52 Week Share Price Low-High
$3.95 - $8.35
Cash & Short-Term Investments
$18.6 million
Debt
NIL
Revenue
$20.5 million (2015)
$27.0 million (2016)
Headquarters
Mississauga, ON
(March 31/17)
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Management
Team title style
John London
• Over 30 years management experience and over 12 years of pharmaceutical experience
• Formerly Co-CEO of Nuvo Research since 2009, previously Nuvo’s Vice-Chairman since
2005
• Graduate of the University of Western Ontario law school and holds a Masters of Law
Degree from University College London
Jesse Ledger
• Over 15 years of pharmaceutical business development
• Prior to joining Nuvo in April 2016, was Vice President, Business Development &
International Business of Tribute Pharmaceuticals Canada
• Holds an honours Bachelor of Business Administration degree from Trent University
Mary-Jane Burkett
• Over 4 years of pharmaceutical experience
• Chartered Professional Accountant and holds an honours Bachelor of Business
Administration degree from the Ivey Business School, University of Western Ontario
Tina Loucaides
• Over 14 years of legal experience in the biotechnology and pharmaceuticals area
• Nuvo’s General Counsel since 2008
• Graduate of Osgoode Hall Law School and holds a Bachelor degree and a Master of
Science degree from the University of Toronto
Cally Lunetta
• Over 30 years of pharmaceutical manufacturing experience
• 15 years overseeing the Nuvo manufacturing facility
• Holds a Bachelor of Science degree from McGill University
Chief Executive Officer
President
Vice President & CFO
Vice President, Secretary
& General Counsel
Vice President,
Manufacturing
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Board
Directors
Master title style
Dan Chicoine
Chairman
(Executive Chairman & Interim CEO, Crescita
Therapeutics Inc.)
• Formerly Co-CEO of Nuvo Research since 2009,
and Nuvo’s Chairman since 2005
• BComm from the University of Toronto and is
also a Chartered Professional Accountant
Jacques Messier
Chair of the Governance, Compensation &
Nominating Committee
(Chief Executive Officer, Toronto Humane
Society)
• DVM from the University of Montreal and an MBA
from the University of Western Ontario
David Copeland
Robert Harris
(Former CFO of Magna International Inc. and
CEO of the Cosma Group of Magna)
• BMath from the University of Waterloo and is
also a Chartered Professional Accountant
(Director, Aralez Pharmaceuticals Inc. and
CannaRoyalty Corp.)
• Former co-founder, President & CEO of Tribute
Pharmaceuticals
Anthony Dobranowski
John London
(Former Vice President of Magna, and prior to
that held various executive positions (Vice
Chairman, President and CFO) at Tesma
International Inc., a public subsidiary of
Magna)
• Formerly Co-CEO of Nuvo Research since 2009,
previously Nuvo’s Vice-Chairman since 2005
• Graduate of the University of Western Ontario law
school and holds a Masters of Law Degree from
University College London
Lead Director
Director
Director
Director and CEO
• MBA from the University of Toronto and is also
a Chartered Professional Accountant
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Nuvo Pharmaceuticals
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Highlights
• Commercial stage healthcare company
•
3 commercial products: Pennsaid 2%, Pennsaid, HLT Patch
•
Cash flow positive and profitable
•
2016 revenue grew 32% over 2015
• Strong barriers to entry: long-life IP and long-term contracts
• FDA licensed manufacturing facility located in Québec
• Future revenue growth
•
Pennsaid 2% out-licensing in international markets
•
M&A plan to acquire accretive products and businesses
• Strong balance sheet with $18.6 million of cash and short-term investments
and no debt (March 31, 2017)
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To discuss opportunities contact:
Investor Relations
(905) 673-3627
[email protected]
nuvopharmaceuticals.com